Is your prescription coverage 'Creditable'? Does it matter?

You may have prescription drug coverage from other sources but Medicare may not consider it equivalent to Part D unless that coverage is 'Creditable'. This article explains what that means.

Creditable Coverage

If you have prescription drug coverage from sources other than Medicare, and that coverage meets or exceeds what is on average offered by Medicare Part D plans, the coverage from that other source is considered ‘Creditable'.

You need not enroll in a PDP plan if you have other creditable coverage. Ensure that you do not go without creditable coverage or Medicare Part D for 63 days or more. If you go beyond 63 days without enrolling in Part D, you may end up paying a late enrollment penalty.

Determination of ‘creditable coverage’ is based on whether the actuarial value of the coverage is equal to or exceeds the actuarial value of standard prescription drug coverage under Medicare Part D plans, in accordance with CMS actuarial guidelines.

The Federal Employee Health Benefits (FEHB) Program, Veterans' Benefits, TRICARE (military health benefits) and Indian Health Services are recognized as ‘creditable coverage'.

If your prescription drug coverage is through your current or former employer or union, they should send you a letter indicating whether your drug coverage is ‘creditable’. Do not assume but make sure that your coverage is creditable. CMS has created a Creditable Coverage Determination process that allows employers to identify their creditable coverage status.

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